Nation’s finances improving: Cathay Financial report

‘STEADY’:：While financial conditions remain tight, they would not tighten further after the better-than-expected results at the EU summit, it said

By Amy Su / Staff reporter

Tue, Jul 03, 2012 - Page 13

The nation’s financial conditions may improve to “steady” for this month at the earliest, following the public’s rising confidence in the stock market, Cathay Financial Holding Co (國泰金控) said yesterday, citing the latest results from its financial conditions index (FCI).

Meanwhile, the composite monitoring indicators for the economy — issued by the Council for Economic Planning and Development every month — may stop flashing a “blue light” from this month at the earliest on the back of the continuously rising pace of leading indicators, Cathay Financial added.

The FCI, co-developed with National Taiwan University, aims to offer a snapshot of the nation’s financial conditions based on data from domestic bonds, equities, foreign exchange and overnight lending markets. The index’s base is 2003.

With a reading of 109.4 points last month, the index indicated tightening financial conditions, according to Cathay Financial, the nation’s largest financial services provider.

“However, the better-than-expected results from the EU summit may not lead Taiwan’s financial conditions to further tighten in the near future,” Cathay Financial said in its monthly report.

The trend of the nation’s index of leading indicators — which rebounded for the ninth straight month last month — provided more evidence that overall economic indicators may stop flashing blue from this month at the earliest, Cathay Financial said.

However, compared with the “V-shaped” economic rebound seen in the second half of 2009 after the global financial crisis, Cathay Financial said sentiment would not recover that fast this time amid slower momentum.

Cathay Financial maintained its GDP growth forecast for this year at 2.45 percent because of the impact of continuous uncertainties about external and internal momentum.